Man Group: Institutional Investors Looking for Tail Risk Protection

Man Group Plc one of the world’s largest alternative investment firms just got a little bit bigger. Assets under management as of $58.4 December 31st were 2011 billion. As of February 29th 2012 the fund has $59.5 billion (aum). The increase is due to a 2.5% increase ytd for the firm.

The fund managers noted the following outlook:

Difficult nine month trading period for Man and the broader asset management industry

Man Group being one of the largest hedge funds deals with many high net worth individuals, fund of funds, and other large investment firms on a regular basis. They stated that institutional investors are currently looking for the following: Diversification, protection against downside and tail risk, long term returns.

As others have noted, many investors are now looking to protect against tail risk, or black swan events. However, since these products are popular now, they are expensive, and it is also difficult to figure out what to protect oneself against.

Man Group as noted above has a Japanese hedge fund, which returned year to date a whopping 19.1%. Man noted that there is a $760 billion market for assets in Japan.

The Australian market was also noted to have an even larger base, with over $1.4 trillion of assets. Of the total, $980 billion are institutional and $427 billion retail.

Over 50% of the firms’ assets are invested in Europe. Only 10% of assets are invested in the Americas, which is the same as MENA. 17% of assets are dedicated to Japan, and the remaining 10% to South East Asia and Australia.

It is slightly peculiar that the firm is very bearish on the world economy, yet seems to be very bullish on Japan, which is considered one of the weakest countries. We will provide details about this quandary in a later article.